Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
The Evanston Company acquired a 25% interest in Straw Enterprises for S8 000.000 and appropriately applied the equity method. During the first year, Straw reported
The Evanston Company acquired a 25% interest in Straw Enterprises for S8 000.000 and appropriately applied the equity method. During the first year, Straw reported net income of $1, 060,000 and paid cash dividends totaling $100,000 What amount will The Evanston Company report regarding its Straw investment at the end of the first year on its Income Statement? Investment earnings totaling $250,000 Investment earnings totaling $265,000 Net investment earnings totaling $225,000 Dividend income totaling $25,000 Robert Corporation acquired a 60% interest in the Evanston Company on December 31 for $3,000,000 During the year, Evanston reported net income of $500,000 and paid cash dividends of $100,000 How should Robert account for its investment in Evanston? Apply the equity method and report the investment at market value at year-end Apply the equity method and perform a full consolidation at year-end Apply mark-to-market accounting and consolidate the statements at year-end Account for the investment as a special purpose entity On January 1. Evanston Corporation purchased 40% of the outstanding common stock of the Straw Corporation for $275,000. During the year, Straw Corporation reported net income of $100,000 and paid cash dividends of $50,000 The balance of the Investment in the Straw Corporation account on the books of Evanston Corporation at year-end is: $200,000 $295,000 $220,000 $270,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started